Ethically Speaking - Wells Fargo

The first four parts of an 8-part Special Edition of Ethically Speaking are now posted.The Institute for Enterprise Ethics takes a deep dive into the Wells Fargo "Ghost Accounts" Scandal. Click here to listen.

Busy, busy, busy…

Yes, indeed the SEC and the Labor Department have been busy promoting changes in rules governing trading desks, bank board rooms, corporations’ financial disclosures and other Wall Street interests. The effects of these changes will be to:

· Allow brokers to invest their clients’ funds to their own advantage rather than to the clients’

· Make the banks’ stress tests easier to beat so financially stressed banks will have an easier pass not quite 10 years ago.

These do not appear to me to be the best policies in dealing with some of the most egregious pratfalls that brought done most of the world’s financial systems ten years ago.

Why They Do It: Inside the Mind of the White-Collar Criminal

Why do seemingly honest and law abiding people succumb to the temptation to commit egregious white-collar crimes? It’s not what you might think Relying on interactions with 50 former executives and now convicted criminals, Harvard Business School Professor Eugene Soltes, explains in his new book, Why They Do It: Inside the Mind of the White-Collar Criminal, that these criminals make their decisions the same way the rest of us to – falling back on gut intuitions. Click here for a summary of an article about the principle conclusions from Professor’s Soltes’ research findings.

Business Ethics, Governance and Compliance News

Say It Isn’t So, eh?

According to the Wall Street Journal, our neighbors to the north are looking into complaints Catalyst inflated values and deceived borrowers. Canada, with their good boy prime minister has always seemed so good and so pure. How disappointing!

Making Your Company More Ethical

Recently two scholars associated with the University of Pennsylvania published a short article in the Harvard Business Review on What You Can Do to Improve Ethics at Your Company. This advice is based on a study of a sample of C-Suite executives from around the world as well as on the experience the authors gleaned from their own consulting practices.

The 30 leaders in the study recalled a total of 87 “major” ethical dilemmas from their career histories. More than 50 had occurred in the course of the last five years. Another surprise was how few of the incidents were caused by bribery, corruption, or anti-competition issues (only 16 percent of all ethical dilemmas mentioned). More often the dilemmas were the result of competing interests, misaligned incentives, clashing cultures.

Their advice is simple, clear and very practical.

University of Colorado Professor Makes the Case for Restricted Equity

Our colleague and Friend of the Institute, Dr. Sanjai Bhagat, Professor of Finance at the University of Boulder Leeds School of Business and author of the recent book Financial Crisis, Corporate Governance, and Bank Capital presents a compelling argument that basing senior executive compensation on restricted equity can help boards of directors meet three important criteria for an effective compensation program: “simplicity, transparency and a focus on creating and maintaining long-term shareholder value."

Whistleblowers: Not just corporate tattle-tales, but actual change agents.

In a Fair Game column in the New York Times, Gretchen Morgensen reported on a research study by Assistant Professor Jaron H. Wilde at the University of Iowa that found “a sharp and lasting drop in financial wrongdoing at companies that were subject to whistle-blower investigation.” While, this finding seems quite reasonable from an intuitive perspective, it is very gratifying to have some hard empirical evidence that whistleblowers do provide some measureable value to the companies being whistle blowed upon.

Who’s Responsible for the Opioid Epidemic?

More than 300,000 American have died from opioid addiction since the late 1990’s according to the Centers for Disease Control and Prevention. The Atlantic magazine reports: “In 2012, there were 793 million doses of opioid prescribed (in Ohio), enough to supply every man, woman and child with 68 pills each.”Too many doctors prescribe too many doses. Pharmacies fill too many prescriptions. Distributors deliver too many shipments. Manufacturers produce and promote too many pills. All of these businesses are aware of the severe personal crises these medicines are causing and to which they are major contributors. Why don’t they do something about it?

Strategic Partners

NetImpact's mission is to cultivate a community of Daniel's College of Business students and professionals dedicated to using business as a platform for creating positive social, environmental, and financial impact.

Strategic Partners

The vision of the National Association of Corporate Directors is to develop the best educated directors with a focus on skills, ethics and leadership. Their mission is to provide real learning and quality networking for directors and board engaged “C” suite officers and to be the voice for the director.

About the Institute

The Institute for Enterprise Ethics was established at the Daniel's College of Business as the vehicle to extend the College’s expertise and resources in business ethics to the practitioner community of executives, officers and directors of commercial and social enterprises in the region.